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BT Law: Defining success by turning a cost center into a profit center

Under BT Law’s license as an Alternative Business Structure (ABS) by the Solicitors Regulation Authority (SRA), it offers claims and legal handling services to external clients in four product areas: employer’s liability, employment law, motor claims and public liability claims. BT Law’s team draws experience and resources from BT Legal, its parent company’s corporate legal department.

BT Law adds to the evolving legal landscape in England and Wales as it moves the BT Group and BT Legal from being a sophisticated buyer of legal services to a sophisticated seller. Forum discussed BT Law’s formation and services with Director Archana Makol.

FORUM: Can you provide background on BT Law in relation to its parent company and its in-house legal department?

ARCHANA MAKOL: Going back a little bit before my time, the way claims litigation was set up was disparate. Geographic offices took whatever came through their doors, handling many claims made on the business and made out by the business, such as injury, road traffic or employment claims. In the mid-to-late ‘90s, claims handling was pooled into a single location in Sheffield. Bits of it were outsourced to insurers and brokers to handle on our behalf for many years but that came back in-house about 10 years ago for several reasons.

BT liked providers that were efficient, drove process and got the right financial results. But it also wanted a supplier that understood the business. Types of claims can look small but have quite a big brand impact. BT wanted that sensitivity in how claims were handled. Since we already had a team in the legal department doing elements of injury work and liability work, BT put the work in-house, lock, stock and barrel.

We didn’t build our claims and legal handling teams to make money. We did it to provide our own business with the best service, efficiency, brand and culture.

When the landscape changed under the Legal Services Act (LSA) and it appeared possible for an in-house legal team under an ABS to offer the same services outside, we got to thinking we could have a go at this. And that’s how BT Law came about. Internal work for BT is done under the BT Legal banner; BT Law only works for external customers.

FORUM: Was BT Law fit or retrofit for the ABS purpose?

MAKOL: The ABS envisaged something different than what we set up. It envisaged multidisciplinary practices and a different law firm ownership from the classic partnership model. I don’t think it recognized what corporate businesses wanted to do. When we applied, I led the year-long project to obtain the licence. The model we came up with, the flexible secondment model, was very much something we dreamt up ourselves. At first the SRA really didn’t understand our ownership structure and who could interfere with our day-to-day running. But the regulator was fairly comfortable with it once we sat down and explained what we were trying to do. We have an agreement between BT Law and the BT Group. They give us resources and then we pay for those resources. We have to make sure that we make margin on what we charge our customers from what we repay internally.

FORUM: Who are your customers or clients?

MAKOL: Generally, they are actually the individual corporate businesses. At the moment our key product is uninsured loss recovery. We do it for our own business. If your vehicle has been hit and you have a minor level of damage that is not under your insurance but you want to get the recovery back, we offer to recover it for you. And that’s probably one of our fastest growing areas at the moment in the motor space. No insurance company is involved. That is a corporation-to-corporation relationship. Our other products have a similar business-to-business imperative.

FORUM: Is there commonality among BT Law’s product offerings in employer’s liability, employment law, motor claims and public liability?

MAKOL: They are insurance-type products. We have experience in self-insuring the business, therefore we kind of built those processes ourselves. And we picked those out because that’s what we do. We’ve set this up to focus on the stuff we’re good at and we know we can bring value to the business. We’ve kind of tested out our own business and honed the process.

FORUM: Do BT Law and BT Legal share resources?

MAKOL: Separate but not separate. The reason we can do this is we capitalize on existing infrastructure. BT Law must keep external client information separate from BT Legal, but the data feeds into the same system and processes. It just has a separate block on it – only BT Law people can see the external customer.

BT Law uses approximately 73 team members of BT Legal who have signed secondment agreements. They carry on all their BT Legal work as BT employees, but they can be a resource for BT Law to serve external clients. They don’t move from their desks; they hop onto a different part of the system to help that customer need.

FORUM: How do you envisage growing the business from where it is today? New products? New geographies?

MAKOL: At the moment our immediate forecast is on the motor side of the business and we’ll see where the next year or 18 months takes us. Our immediate growth is to focus on our key product areas rather than go outside of that and I think that would be the case for the next three years. We have no intention to move out from England and Wales. We may look at other product areas, and we are open to ideas, but I think we’re still new and small. We started off as an in-house legal team and didn’t quite appreciate the support you need when you go out there and sell. So I think even though we’ve been licenced for about three years, we took about 18 months to realize that just being good would not get there. So we had a business development salesperson come on board just over one year ago.

FORUM: What’s your definition of success? Spin out the company?

MAKOL: End to end, it’s about business and brand. The brand bit is an important part of why we exist not only to process claims but also to protect the brand impact of how we do that. And to other businesses, that’s what we would say makes us different. At the moment it’s about turning a cost center into a profit center and that would be what we would define as success. After three years, this is the first year BT Law will make profit. It’s about offsetting the cost of our unit and bringing in external revenue. It’s a bit of an experiment. We’re really alive to that and will give it a go and see where it takes us.

BT Law Limited is a company wholly owned by BT Group plc, a global communications service provider based in the UK with 102,500 employees serving customers in 180 countries.

Meet the interviewee


Archana MakolArchana Makol 
is Chief Counsel BT Legal and Director BT Law Ltd. She led the ABS project team for BT, and became a director of BT Law Ltd upon the grant of licence on March 1, 2013. BT Law Ltd provides claims and legal services for non-BT customers.

 


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